Local business stories of the year

Friday

Dec 28, 2007 at 12:01 AMDec 28, 2007 at 7:01 PM

A look at the 2007 happenings that have had/will have the biggest impact on the Boston area.

Jon Chesto and Steve Adams

There were few sections of the economy left untouched by the continued weakening of the housing market in 2007. The market slump's impact expanded as foreclosures rose and mortgage lenders and the companies that backed them ran into trouble, making it harder for many borrowers to get the loans they needed.
The corporate deal-making frenzy of recent years slowed down as the availability of credit tightened, but there were still several major acquisitions with local significance. The Greater Boston commercial office market, which had been red-hot for the past two years, also cooled off, but several giant retail projects continued to move forward.
These are just a few of the big changes in 2007 that affected the state's business community; several stand out as ones that will have a long-lasting impact.
1. HOUSING WOES
The local housing market had seemed like it could be turning the corner after a two-year downturn over the summer, when sales and prices were relatively flat compared with the same time in 2006. But then the national housing market's woes, including the blowout in the subprime lending sector, hammered Wall Street, tightening up credit and making it much harder to get jumbo mortgages and other nontraditional loans. The aftershocks were felt in Massachusetts, where home prices and sales volumes resumed their declining trend during the fall. Now experts are saying they don't expect a true turnaround in the housing market until next summer, at the earliest.
2. IDENTITY THEFT
Retailers of varying sizes have had to deal with the threat of identity theft, particularly as credit and debit cards become increasingly popular alternatives to checks and cash. But no data breach can compare in size to the one that Framingham-based retailer TJX Companies disclosed in January. The company eventually said that as many as 46 million bank card accounts could have been compromised, but other companies that sued TJX said the number was much higher than that. Here in Massachusetts, the TJX data breach seemed to serve as the final nudge the state Legislature needed to pass an identity theft protection bill.
3. CASINO GAMBLING
The odds of a casino coming to Massachusetts increased significantly once the Mashpee Wampanoag tribe won federal recognition. The tribe took control of several big pieces of land in Middleboro, and in doing so deeply divided the community over whether a casino should be built there. In reaction, Gov. Deval Patrick proposed a plan that would allow for three casino resorts, each in a different part of the state, as a way to give the state more control over casino gambling. But the bill still faces stiff opposition in the House, where Speaker Sal DiMasi continues to express concerns about expanded gaming.
4. AUTO INSURANCE RATES
For the first time in 30 years, state officials took a major step toward increasing auto insurance competition in the state. Insurance Commissioner Nonnie Burnes replaced the old system, in which the commissioner sets a standard set of rates for all insurers, with a new one that still gives her the authority to review each insurer's rates. The goal was to attract more insurers to the state, including big national companies such as Geico and Progressive. But the switch has attracted only a minimal interest among insurers that don't already do business here. The average rate will drop next April, but many customers will see price increases under the new system.
5. HOLLYWOOD EAST
Massachusetts became Hollywood East as state lawmakers improved the state's already-generous tax incentives for movie makers that essentially reimburse production companies for up to 22.5 percent of their expenses in the state. The new law this summer apparently opened the floodgates: Several major motion pictures (such as ``Pink Panther 2,'' ``The Women,'' ``The Box'' and ``Bachelor No. 2'') have since come to the state to be filmed and more are on the way. Meanwhile, plans are under way for the state's first permanent major movie studio complex in Plymouth.
6. RETAIL DEVELOPMENT BOOM
Retail development continued to boom south of Boston in 2006, driven by the increasing popularity of outdoor lifestyle centers.
The Shoppes at Colony Place, a 150,000-square-foot outdoor shopping center, opened in September as a complement to the big box component of the Colony Place project that opened in 2005. The 20-store lifestyle center contains a mix of boutiques and restaurants.
The Kraft family, owners of the New England Patriots, made their first venture into the retail sector, opening the first phase of their Patriot Place shopping center next to Gillette Stadium in Foxboro in November. The center, which will eventually total 1.3 million square feet, is anchored by New England's first Bass Pro Shops.
Developers gained final permits for Westwood Station, a 4.5 million-square-foot mixed-use development at the former University Avenue industrial park. The project is a joint venture of Cabot, Cabot & Forbes, New England Development and Commonfund Realty. The first phase will consist of 495 condos built atop street-level retail shops, part of the 1.3 million-square-foot retail portion of the $1.5-billion project.
W/S Development of Newton plans a 530,000-square-foot lifestyle center called Legacy Place at the National Amusements headquarters in Dedham. The theater chain's headquarters also will be rebuilt at the site.
7. FINANCIAL SERVICES MEGAMERGERS
State Street Corp. CEO Ron Logue didn't have to go far to find his next acquisition candidate. He targeted Investors Financial Services Corp., based in the John Hancock tower, in a deal valued at more than $4 billion. The acquisition, which was announced in February and was completed in July, cemented State Street's position as the No. 2 provider of custodial services to asset managers in the world, and strengthened its position in the growing hedge fund market. The acquisition led to about 1,700 job cuts, primarily among Investors Financial workers. But it will allow State Street to better compete against two of its biggest rivals, Bank of New York and Mellon Financial Corp., which also merged this year.
8. VIDEO GAME SUPERSTARS
Two local video game developers struck it big with blockbuster releases in 2007 amid a renaissance in the Massachusetts computer game industry. Westwood-based Turbine Inc.'s ``Lord of the Rings Online: Shadows of Angmar'' shot to the top of the charts among massive multiplayer games after its launch in April. Quincy-based Irrational Games, now known as 2K Boston, created a stir in August when it launched ``BioShock,'' which quickly became the most-talked-about first-person shooter title in gamers' circles.
9. CHANGES AT THE TOP AT TALBOTS
Talbots CEO Arnold Zetcher announced in February that he would step down in early 2008 after 20 years at the helm of the Hingham-based women's clothing retailer. Under Zetcher's leadership, Talbots grew from 109 stores and $360 million in annual sales to nearly 1,300 Talbots and J. Jill stores with $1.8 billion in sales. Zetcher expanded the company by opening stores in traditional malls, shopping centers and downtown areas. The company also launched children's and plus-sized stores, and has been test-marketing a Talbots Men concept. The company made its first acquisition in 2006, buying Quincy-based rival J. Jill. Trudy Sullivan left a top executive position at Liz Claiborne to succeed Zetcher at Talbots.
10. TOUGH TIMES AT TWEETER
Tweeter Home Entertainment Group filed for Chapter 11 bankruptcy in June. Tweeter's business model as a retailer of high-end audio and video products has come under increasingly stiff competition from bigger rivals such as Wal-Mart, Best Buy and Circuit City. Falling margins on flat-screen TVs particularly hurt the Canton-based company's prospects, although it has made some headway with efforts to focus on home-installation services. The 102-store chain was acquired for $38 million by hedge fund Schultze Asset Management of Purchase, N.Y. CEO Joe McGuire resigned shortly after the change of ownership and was succeeded by George Granoff, a former executive for the Party City, Bradlees and Ames chains.
The Patriot Ledger

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